Unplugging From the News Cycle When Investing

Rodney Johnson  |

A couple of weeks ago my family gathered at my sister’s house for an afternoon by the pool. At one point, my dad looked over and said, “Thanks for the investments last month. Does that one company do music?”

I handle his portfolio, and he’d made good money the previous month, with one holding standing out from the rest. At his age, I have him in the requisite fixed income holdings, like the closed-end funds that Charles buys in Peak Income, and I also use an option strategy that gives him exposure to the S&P 500 while limiting potential losses. But the fun stuff, the investments that have the potential to add an Alaskan cruise to his life… those are the ones he wants to talk about.

And no, it doesn’t do music.

He’d confused the company he owns, Shopify  (SHOP) with Spotify  (SPOT). It’s easy to see the similarity in name and ticker.

He didn’t know, and didn’t really care, what Shopify does. That’s my job.

When I came across the company a couple of years ago, I found the premise interesting for several reasons. The company offers small businesses a way to immediately access online payment systems for their goods and services… and provides incredible support. With more consumers moving online, it makes sense that more businesses are doing the same. And the easier it is to create a business, even if it’s a part-time gig, the more people are likely to give it a go.

Beyond that, it has nothing to do with the news cycle, including trade wars and politics, and it doesn’t rely on the Fed.

When I’m looking for game-changing investments, I’m not trying to find something that fits the current broad narrative, I want something unrelated, so that it can make big moves (hopefully higher, of course) without relying on macroeconomic trends.

Shopify fit the bill.

It also had one more, great attribute: Andrew Left of Citron Research hated it.

I don’t know Mr. Left, but I casually follow his research because I find him smart and articulate. The stocks he comments on tend to be big movers. When I disagree with him, I sometimes fade his call, or even go the opposite, which has paid off. Names like iRobot  (IRBT) and Exact Sciences  (EXAS) have done well after he said they should crater, just like Shopify.

To be fair, he’s made some great calls as well, so this isn’t bashing at all. He makes bold calls on fast-moving names, it’s all part of the game, and it’s what can give you an investing advantage.

When looking for investments that can super-charge your returns, you must look farther than the typical names that cross the tape during the day. In my new service, Fortune Hunter, I use several approaches to identify potential home runs, including the Second Wave Cycle, that identifies great stocks that have been temporarily beaten down and forgotten, as well as stocks that have been underestimated or recently knocked back by a research report or other outside influence.

When Andrew Left issues a report knocking a company’s stock price, you can bet that the shares will fall… at least for a while. If you think he’s wrong, then buying the shares on the set back can be a great way to realize hefty gains.

All of it points back to the same thing, using research to find, and unlock, value that’s temporarily hidden from view, which is a lot like what fortune hunters do. If you haven’t had a chance to check out my new service, click here and give it a look.

Rodney Johnson

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
IRBT iRobot Corporation 91.82 2.42 2.71 319,656 Trade
SHOP Shopify Inc. Class A Subordinate 304.70 -1.15 -0.38 621,323 Trade
EXAS Exact Sciences Corporation 114.99 3.08 2.75 780,818 Trade
spot Spotify Technology S.A.

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